ROI, RI, EVA. Performance Auto Company operates a new car division (that sells high- performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some division financial measures for 2017 are as follows: Home Page Layout Data Formulas Insert New Car Division Performance Parts Division 2 Total assets 3 Current liabilities 4 Operating income 5 Required rate of retun $33,000,000 $ 6,600,000 $ 2,475,000 12% $28,500,000 $ 8,400,000 $ 2,565,000 12%

ROI, RI, EVA. Performance Auto Company operates a new car division (that sells high- performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some division financial measures for 2017 are as follows: Home Page Layout Data Formulas Insert New Car Division Performance Parts Division 2 Total assets 3 Current liabilities 4 Operating income 5 Required rate of retun $33,000,000 $ 6,600,000 $ 2,475,000 12% $28,500,000 $ 8,400,000 $ 2,565,000 12%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Calculate residual income (RI) for each division using operating income as a measure of income and total assets minus current liabilities as a measure of investment.

ROI, RI, EVA. Performance Auto Company operates a new car division (that sells high-
performance sports cars) and a performance parts division (that sells performance-improvement parts for
family cars). Some division financial measures for 2017 are as follows:
Home
Page Layout
Data
Formulas
Insert
New Car
Division
Performance
Parts Division
2 Total assets
3 Current liabilities
4 Operating income
5 Required rate of retun
$33,000,000
$ 6,600,000
$ 2,475,000
12%
$28,500,000
$ 8,400,000
$ 2,565,000
12%

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